Tax decrease in Central Valley dependent upon cap override

Wednesday

Mar 30, 2016 at 5:00 AMMar 30, 2016 at 8:09 AM

Alissa Scott @OD_Scott

School budgets can get really confusing, especially when factoring in the state’s mandated tax cap.

The Central Valley Central School District is finding itself in the unusual position of having to override the cap to have a tax decrease. That means 60 percent of its voters have to approve the cap override to save themselves a few dollars.

“It sounds crazy, needing a 60 percent majority to approve a tax cut,” Superintendent Richard Hughes said. “This is the result of retired capital project debt and its effect on the complicated tax-cap formula.”

Here’s the explanation in a nutshell:

Central Valley is proposing an $8.38 million levy, which is less than last year. But because its capital project debt is over, the state isn’t allowing the district to collect as much from taxpayers. So, its proposed tax levy this year is more than the formula’s cap, but still less than last year’s, resulting in a tax decrease.

Of the 601 school districts in the state that have submitted their proposed tax levies to the state Comptroller’s Office, 76 are proposing to override their tax cap.

“This just shows how much people weren’t thinking when (the state) made this tax-cap plan,” said Rick Timbs, executive director of the Statewide Schools Finance Consortium. “(Central Valley) tried to decrease taxes at a constant rate from the merger between Mohawk and Ilion, but because the debt fell off and other costs continue escalating, the debt fell off too fast to make the adjustment.”

In order to stay under the 0.12 tax cap, Central Valley’s budget could not exceed $7,777,972, which is $602,028 less than last year. But the district wants $8.38 million, so it has to exceed the cap.

Voters will decide Tuesday, May 17.

Across the state, there has been a significant increase in the number of negative tax levies imposed by the tax cap, according to the New York State Association of School Business Officials.

“This year dramatically demonstrates fundamental flaws in the tax cap,” said NYSASBO Executive Director Michael J. Borges. “A tax cap that is tied to an inflationary number that does not reflect school district costs and which results in negative levies should raise concerns with both state policymakers and the general public that want a quality education for our students.”

The tax cap first applied to local governments in 2012. It limits tax levy increases to the lesser of the rate of inflation or 2 percent. School districts are allowed to override the cap with a super majority, or 60 percent voter approval of their budgets.

In his three years as superintendent of Central Valley, Hughes said the administration has taken steps to rein in expenses by negotiating employee contracts and reducing unnecessary positions by not replacing retirees.

And in terms of revenue, he said, the school board has followed a plan that slowly and incrementally increases taxes, preventing the “swing of tax freezes followed by a dramatic jump in taxes.”

“Taxpayers do not want their tax bills bouncing up and down each school year,” he said. “The tax cap calculation would have allowed a sizeable tax increase in our first year as a merged district. Instead, the board presented three budgets that controlled spending and taxes and continued to broaden student opportunity. After three years, our tax levy remains below that 2012-2013 level.”